Cape Town — Lower prices and increasing competition for investment are driving many African states to make it easier and cheaper for overseas companies to keep their oil and gas output flowing.
From Ghana to Gabon, governments are adjusting terms to lure picky investors who are also increasingly concerned about long-term demand for fossil fuels as renewable energy gains ground.
The shift follows declining oil production in Angola and Cameroon and disappointing bid rounds in Ghana. It also marks an recognition that the era of $100 per barrel oil is over.
“Because of increased competition for investment in Africa, we are changing our strategy,” Mohammed Amin Adam, Ghana’s deputy minister for petroleum, said at last week’s Africa Oil Week in Cape Town.
Ghana’s Adam was not alone in announcing plans to revise oil and gas licensing laws in an effort to spur output.
Ministers from Angola, Cameroon and Gabon also stressed changes to legal and fiscal terms to boost their own production.
“We are aware that oil companies have to spend a lot of money. That is why we are careful in the way we design our (terms) to have it as a win-win,” Gabon’s petroleum minister Noel Mboumba said at the event.
As renewables and efforts to cut fossil fuel consumption gain ground, there are also growing concerns that the world will not need all of Africa’s oil.
“We don’t know how much new supply we’re going to need. So obviously everybody is going to have to be competitive for that,” Andrew Latham, vice president of global exploration at Wood Mackenzie, said.
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- Reuters
